(Recasts with M&C Saatchi's response, updates shares)

By Sachin Ravikumar and Shanima A

May 17 (Reuters) - M&C Saatchi on Tuesday rejected a fourth takeover offer from its biggest investor Vin Murria, saying the "derisory" proposal worth 253.6 million pounds ($316.4 million) undervalued the British advertising group's business.

Software entrepreneur Murria's acquisition vehicle AdvancedAdvT announced the fresh offer earlier, giving M&C investors a choice between receiving 2.530 new AdvancedAdvT shares for each share held or a mix of cash and shares.

Based on AdvanceAdvT's last closing share price, both options value M&C Saatchi at 207.5 pence per share, representing a 27% premium to M&C's Monday closing price. At their peak in 2018, M&C shares were worth 430 pence apiece.

AdvancedAdvT, which is also backed by private equity group Marwyn, wants to combine its digital capabilities with the brand recognition of M&C - known for its historical advertising links to Britain's ruling Conservative Party - and invest heavily in M&C to help it compete better.

"I urge shareholders to reject this bid as it significantly undervalues the business and prospects of M&C Saatchi," M&C Chairman Gareth Davis said in a statement.

M&C shares pared earlier gains of over 10% to trade 3.2% higher at 168.2 pence by 1323 GMT, while AdvancedAdvT shares were up 0.6%.

Founded in 1995 by ad mogul brothers Maurice and Charles Saatchi, M&C has been recovering from a 2019 accounting scandal but last month reported a record annual profit helped by client wins and deepened relationships with the likes of Alphabet's Google, Uber and TikTok.

The company said its independent directors have also unanimously rejected AdvancedAdvT's offer.

AdvanceAdvT's previous all-stock approach from February was worth 2.347 AdvancedAdvT shares for each M&C share. The Ad group disclosed on Tuesday it had also rejected two other lower proposals made in January.

"ADV has access to an existing pipeline of selective (mergers & acquisitions) opportunities comprising businesses that enhance M&C Saatchi's data and analytics capability, as well as complementing the existing offering," it said.

Murria and AdvanceAdvT own 22.3% of M&C. Shareholders owning a further 20.2% have indicated their support for AdvanceAdvT's offer, it said, adding that it would add two industry veterans to the board of the combined company if a deal is completed. ($1 = 0.8078 pounds) (Reporting by Sachin Ravikumar and Shanima A in Bengaluru; editing by Uttaresh.V, Aditya Soni, Barbara Lewis and Emelia Sithole-Matarise)